Who – the protagonist
Andrew Mude, the lead agricultural economist of the Index-Based Livestock Insurance (IBLI) team (part of the International Livestock Research Institute – ILRI) in Nairobi, Kenya. Well-known in index-insurance circles, Dr. Mude leads a team of scientists and a range of partners in hopes of reducing pastoralist vulnerability to catastrophic droughts.
At ILRI, Dr. Mude’s ambition was to find a risk management solution that would be more proactive, faster and more focused on the provision of complementary services that could enhance pastoralist livelihoods as a whole. As livestock are the principal asset owned by 3 million pastoralists, in the ASALs of Ethiopia and Kenya he started by seeking ways to help protect this valuable ‘living asset’ through an index insurance product. IBLI represents an exciting innovation that could allow vulnerable rural smallholder farmers and livestock keepers to benefit from insurance and thus reduce climate-related risk, however it has experienced growing pain scaling-up.
Droughts in Eastern Africa account for 75% of livestock deaths in the Horn and routinely leave pastoral communities destitute, given that the average herding household holds 100% of its productive assets in the form of livestock. In comparison, an initial analysis IBLI has shown that insured households experienced a 25% reduced likelihood of significantly reducing their nutritional intake; a 36% reduction in distress sales of livestock assets (selling livestock to provide quick income in times of hardship); and a 33% reduction in their reliance on food aid when comparing insured and uninsured households. These initial results suggest that IBLI provides a valuable safety net, protecting families from having to take drastic measures during times of drought.
The case study is set in early 2014 in Nairobi, Kenya at the ILRI campus.
IBLI began sales in Marsabit, Kenya, and the product is sold across Northern Kenya, as well as the Borana Zone of Southern Ethiopia.
Mude sat back at his desk mulling over the different options and challenges before him. He recognized that all the members of his team wanted to ensure IBLI’s best interests, but held greatly differing views about what that meant…The goal was clear: to grow IBLI. But when and how should this growth take place?
As ILRI’s senior management team gathered together to plan its 2015–2017 cycle, it was time for Mude to present a clearer, better direction for IBLI. If IBLI stayed just in Kenya, how could it keep donors happy and build a sustainable program? If they moved to new countries, how could they use their insights to be successful elsewhere, while ensuring that the Kenyan and Ethiopian programs were not adversely affected? Could they do it all, or would they have to choose? Being either overzealous or overcautious could harm IBLI.